An Ability to Compete

By Jeff Broin, Executive Chairman and Founder of POET

Imagine store alarms blare as a shoplifter sprints from a store. You expect security to chase this person, for a disciplinary action to be issued.

Instead, it’s you that security pursues. But you are a responsible shopper! This has to be a mistake. At the security office, you ask why you’ve been detained. “For being in the same store as the thief.”

You would be shocked. Well, so are we. Hard to believe as it is, the ethanol and agriculture industries are enduring a similar type of unjust action. A disputed theory called International Indirect Land Use Change (ILUC) included in a recent revision to the Renewable Fuels Standard (RFS2) blames U.S. ethanol producers and farmers for the poor environmental decisions made in other countries, particularly Brazil.

Although this theory includes phony science and holds ethanol to a standard no other industry has to meet, ethanol still proves more environmentally friendly than most fuels. In reality ethanol is approximately 60 percent lower in GHG than gasoline. Even with ILUC, grain-based ethanol is classified as a low carbon fuel with a better than 20 percent greenhouse gas (GHG) emission reduction over gasoline. That 20 percent threshold to be considered a low carbon fuel was met because EPA acknowledged some key points:

- Crop yields are continuing to improve, meaning less land is needed for increased ethanol production.- Distillers grains are an efficient, high-nutrient animal feed, allowing the same corn to be used for both feed and fuel.- Agriculture’s impact on deforestation is less than had been assumed.

Additionally, cellulosic ethanol made from ag residue such as corn cobs was recognized for a 130 percent GHG reduction over gasoline. That means POET’s process for producing cellulosic ethanol helps remove carbon from the atmosphere. Also, combining grainbased and cellulosic plants on the same site in the future will lead to an attractive combined GHG reduction. We are disappointed with EPA’s inclusion of ILUC in the RFS2 rules, and I can assure you we will continue to fight for the truth.

Recently, the EPA spoke highly of the possibility of E15 and higher blends of ethanol, an important issue for the industry if we are to meet the expanding levels of ethanol defined in the RFS.

However, one of the biggest challenges we need to overcome is the 15 billion gallon cap on grain-based ethanol stated in the Energy Independence and Security Act. As grain yields double over the next ten years, it’s critical that we are allowed to convert this new supply to biofuels and protein. Given the ability to compete with gasoline in a fair and open market, we’ll be able to further the technology for both grain-based and cellulosic ethanol to reduce our reliance on foreign energy.

But how do we develop this open market? We give consumers the right to choose. Right now there are only two choices for a conventional vehicle at the gas pump – 100 percent gasoline or 90 percent gasoline. So in effect, the U.S. is mandating at least 90 percent fossil fuels. So, let’s change that. Let’s give Americans the option to choose a renewable, American product at the pump. By increasing the Flex Fuel Vehicles on the market and getting blender pumps installed around the country, we’ll open the market, giving consumers back their rights as Americans to choose a fuel that is better for our environment, creates jobs here at home and doesn’t enrich our enemies. In our industry, policies change and adapt, we take on new requirements, favorability goes up, then down and eventually, I believe, up again. The ethanol market won’t be a steady road. We’re competing with the wealthiest and most heavily subsidized industry in the world. They will fight us every step of the way. To change our nation’s fuel supply, we must be ready to change and adapt. Without question, we will grow this industry to utilize increasing supplies of grain and cellulose. We are here and now. We are the solution.